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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2020	Aug. 05, 2020
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-36305
Entity Registrant Name	Semler Scientific, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-1367393
Entity Address, Address Line One	911 Bern Court, Suite 110
Entity Address, City or Town	San Jose
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95112
City Area Code	877
Local Phone Number	774-4211
Title of 12(b) Security	N/A
Trading Symbol	smlr
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		6,563,176
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001554859
Amendment Flag	false

Condensed Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Condensed Statements of Income - USD ($) $ in Thousands	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Condensed Statements of Income
Revenue	$ 6,373	$ 7,953	$ 15,803	$ 14,714
Operating expenses:
Cost of revenue	700	885	1,550	1,781
Engineering and product development	762	591	1,605	1,160
Sales and marketing	2,473	2,212	5,168	4,281
General and administrative	1,478	1,570	3,069	2,943
Total operating expenses	5,413	5,258	11,392	10,165
Income from operations	960	2,695	4,411	4,549
Interest income (expense)	(1)	(1)	(3)	(2)
Other income (expense)	29		26	(2)
Other expense	30	1	29
Pre-tax net income	990	2,696	4,440	4,549
Income tax (benefit) provision	(85)	77	692	77
Net income	$ 1,075	$ 2,619	$ 3,748	$ 4,472
Net income per share, basic	$ 0.16	$ 0.41	$ 0.57	$ 0.70
Weighted average number of shares used in computing basic income per share	6,548,215	6,411,606	6,540,755	6,368,905
Net income per share, diluted	$ 0.13	$ 0.32	$ 0.47	$ 0.55
Weighted average number of shares used in computing diluted income per share	8,035,048	8,086,140	8,050,394	8,128,241

Condensed Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current Assets:
Cash	$ 13,646	$ 7,741
Trade accounts receivable, net of allowance for doubtful accounts of $56 and $36 respectively	982	3,486
Prepaid expenses and other current assets	639	216
Total current assets	15,267	11,443
Assets for lease, net	1,928	2,079
Property and equipment, net	287	249
Long-term deposits		15
Long-term deferred tax assets	3,905	4,501
Total assets	21,387	18,287
Current liabilities:
Accounts payable	207	338
Accrued expenses	3,343	3,914
Deferred revenue	813	955
Other short-term liabilities	5
Total current liabilities	4,368	5,207
Long-term liabilities:
Deferred Lease		7
Total long-term liabilities		7
Stockholders' equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 6,588,176, and 6,556,221 shares issued, and 6,563,176 and 6,531,221 shares outstanding (treasury shares of 25,000, and 25,000, respectively)	7	7
Additional paid-in capital	19,598	19,400
Accumulated deficit	(2,586)	(6,334)
Total stockholders' equity	17,019	13,073
Total liabilities and stockholders' equity	$ 21,387	$ 18,287

Condensed Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Condensed Balance Sheets
Allowance for doubtful accounts on trade accounts receivable (in dollars)	$ 56	$ 36
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	6,588,176	6,556,221
Common stock, shares outstanding	6,563,176	6,531,221
Treasury stock, shares	25,000	25,000

Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2018	$ 6		$ 25,608	$ (21,418)	$ 4,196
Balance (in shares) at Dec. 31, 2018	6,349,985	(25,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Warrant Re-purchase			(2,687)		(2,687)
Warrant Exercises (in shares)	22,527
Stock Option Exercises			44		44
Stock Option Exercises (in shares)	111,902
Stock-based Compensation			196		196
Net income				4,472	4,472
Balance at Jun. 30, 2019	$ 6		23,161	(16,946)	6,221
Balance (in shares) at Jun. 30, 2019	6,484,414	(25,000)
Balance at Mar. 31, 2019	$ 6		25,719	(19,565)	6,160
Balance (in shares) at Mar. 31, 2019	6,356,147	(25,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Warrant Re-purchase			(2,687)		(2,687)
Warrant Exercises (in shares)	22,527
Stock Option Exercises			31		31
Stock Option Exercises (in shares)	105,740
Stock-based Compensation			98		98
Net income				2,619	2,619
Balance at Jun. 30, 2019	$ 6		23,161	(16,946)	6,221
Balance (in shares) at Jun. 30, 2019	6,484,414	(25,000)
Balance at Dec. 31, 2019	$ 7		19,400	(6,334)	13,073
Balance (in shares) at Dec. 31, 2019	6,556,221	(25,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Option Exercises			70		$ 70
Stock Option Exercises (in shares)	31,955				32,567
Stock-based Compensation			128		$ 128
Net income				3,748	3,748
Balance at Jun. 30, 2020	$ 7		19,598	(2,586)	17,019
Balance (in shares) at Jun. 30, 2020	6,588,176	(25,000)
Balance at Mar. 31, 2020	$ 7		19,470	(3,661)	15,816
Balance (in shares) at Mar. 31, 2020	6,559,076	(25,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Option Exercises			67		67
Stock Option Exercises (in shares)	29,100
Stock-based Compensation			61		61
Net income				1,075	1,075
Balance at Jun. 30, 2020	$ 7		$ 19,598	$ (2,586)	$ 17,019
Balance (in shares) at Jun. 30, 2020	6,588,176	(25,000)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Condensed Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
Condensed Statements of Cash Flows - USD ($) $ in Thousands	Jun. 30, 2020	Jun. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 3,748	$ 4,472
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Depreciation	235	307
Deferred tax expense	596
Loss on disposal of assets for lease	125	97
Allowance for bad debt	36	21
Stock-based compensation expense	128	196
Changes in Operating Assets and Liabilities:
Trade accounts receivable	2,468	(730)
Prepaid expenses and other assets	(408)	(60)
Accounts payable	(131)	125
Accrued expenses	(573)	(538)
Deferred revenue	(142)	493
Net Cash Provided by Operating Activities	6,082	4,383
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment	(100)	(63)
Purchase of assets for lease	(147)	(779)
Net Cash Used in Investing Activities	(247)	(842)
CASH FLOWS FROM FINANCING ACTIVITIES:
Re-purchase of warrants		(2,687)
Exercise of stock option	70	44
Net Cash Provided by (Used in) Financing Activities	70	(2,643)
INCREASE IN CASH	5,905	898
CASH, BEGINNING OF PERIOD	7,741	3,284
CASH, END OF PERIOD	$ 13,646	$ 4,182

Basis of Presentation

6 Months Ended

Jun. 30, 2020

Basis of Presentation

Basis of Presentation

1. Basis of Presentation

Semler Scientific, Inc., a Delaware corporation (“Semler” or “the Company”), prepared the unaudited interim financial statements included in this report in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 9, 2020 (the “Annual Report”). In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any future period, including the full year.

On January 30, 2020, the World Health Organization (“WHO”) declared the recent novel coronavirus (COVID-19) outbreak a global health emergency, which prompted national, state and local governments to begin putting actions in place to slow the spread of COVID-19. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic. The outbreak of COVID-19 has resulted in travel restrictions, quarantines, “stay-at-home” and “shelter-in-place” orders and extended shutdown of certain businesses around the world. For the three and six months ended June 30, 2020 the Company's revenues, primarily from variable-fee licenses were negatively impacted by the COVID-19 pandemic. The extent and duration of the pandemic is unknown, and the future effects on the Company's business are uncertain and difficult to predict. The Company is continuing to monitor the events and circumstances surrounding the COVID-19 pandemic, which may require adjustments to the Company's estimates and assumptions in the future.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In November 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-08 – Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customer (Topic 606). The amendments on this update require that an entity measure and classify share-based payment awards granted to a customer by applying the guidance in Topic 718. The amount recorded as a reduction in the transaction price should be based on the grant-date fair value of the share-based payment award. This standard is effective for the Company’s annual periods beginning after December 15, 2019 , including interim periods within those fiscal years. The Company adopted the new standard on January 1, 2020 and determined that the adoption of this new accounting guidance did not have a material impact on its financial statements.

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of costs. The ASU specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. This standard is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted the new standard on January 1, 2020 and determined that the adoption of this this new accounting guidance did not have a material impact on its financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU modify the disclosure requirements on fair value measurements removing the requirements to disclosure amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. In addition, it modified certain disclosures related to Level 3 fair value measurements and added additional disclosures regarding the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period. This update is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted the new standard on January 1, 2020 and determined that the adoption of this this new accounting guidance did not have a material impact on its financial statements.

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Topic 326”). This ASU requires timelier recording of credit losses on loans and other financial instruments held. Instead of reserves based on a current probability analysis, Topic 326 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. All organizations will now use forward-looking information to better inform their credit loss estimates. Topic 326 requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide information about the amounts recorded in the financial statements. In addition, Topic 326 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326 Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, to introduce amendments which will affect the recognition and measurement of financial instruments, including derivatives and hedging. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments – Credit Losses (Topic 326); Targeted Transition Relief. The amendments in this ASU provide entities that have certain instruments within the scope of Subtopic 326-20 with an option to irrevocably elect the fair value option in Subtopic 825-10, applied on an instrument-by-instrument basis for eligible instruments upon adoption of Topic 326. This standard and related amendments are effective for the Company’s fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2023. The Company does not anticipate this new standard will have a material impact on its financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes. This update is effective for the Company’s annual periods beginning after December 15, 2020, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2021. The Company does not anticipate this update to have a material impact on its financial statements.

In January 2020, the FASB issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the interaction between the accounting for investments in equity securities, investment in equity method and certain derivatives instruments. The ASU is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. This ASU is effective for fiscal years beginning after December 15, 2021. The adoption of this ASU is not expected to have any impact on the Company's results of operations, cash flows or financial position.

In March 2020, FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses standard issued in 2016 (ASU No. 2016-13). The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company's financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (IBORs) and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The ASU can be adopted no later than December 1, 2022, with early adoption permitted. The Company has not yet adopted this ASU and is evaluating the effect of adopting this new accounting guidance.

Assets for Lease, net

6 Months Ended

Jun. 30, 2020

Assets for Lease, net

Assets for Lease, net

3. Assets for Lease, net

The Company enters into contracts with customers for the Company’s QuantaFlo^® product. The Company has determined these contracts meet the definition of a lease under Topic 842. The lease portfolio primarily consists of operating leases that are short-term in nature (monthly, quarterly or one year, all of which have renewal options). The assets associated with these leasing arrangements are identified below as assets for lease. During the three months ended June 30, 2020 and 2019, the Company recognized approximately $5,954 and $5,396, respectively, in lease revenues related to these arrangements. During the six months ended June 30, 2020 and 2019, the Company recognized approximately $12,411 and $10,656, respectively, in lease revenues related to these arrangements, which is included in Revenues on the Condensed Statements of Income.

Assets for lease consist of the following:


	June 30,		December 31,
	2020		2019
Assets for lease	$	3,308	$	3,374
Less: accumulated depreciation		(1,380)		(1,295)
Assets for lease, net	$	1,928	$	2,079

Depreciation expense amounted to $44 and $126 for the three months ended June 30, 2020 and 2019, respectively. Depreciation expense amounted to $172 and $236 for the six months ended June 30, 2020 and 2019, respectively. Reduction to accumulated depreciation for returned items was $22 and $42 for the three months ended June 30, 2020 and 2019, respectively. Reduction to accumulated depreciation for returned items was $87 and $77 for the six months ended June 30, 2020 and 2019, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $59 and $63 for the three months ended June 30, 2020 and 2019, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $125 and $97 for the six months ended June 30, 2020 and 2019, respectively.

Stock Option Plan

6 Months Ended

Jun. 30, 2020

Stock Option Plan

Stock Option Plan

8. Stock Option Plan

The Company’s stock-based compensation program is designed to attract and retain employees while also aligning employees’ interests with the interests of its stockholders. Stock options have been granted to employees under the stockholder-approved 2007 Key Person Stock Option Plan (“2007 Plan”) or the stockholder-approved 2014 Stock Incentive Plan (“2014 Plan”). Stockholder approval of the 2014 Plan became effective in September 2014. The 2014 Plan originally provided that the aggregate number of shares of common stock that may be issued pursuant to awards granted under the 2014 Plan may not exceed 450,000 shares (the “Share Reserve”), however in October 2015, the stockholders approved a 1,500,000 increase to the Share Reserve. In addition, the Share Reserve automatically increases on January 1st of each year, for a period of not more than 10 years, beginning on January 1st of the year following the year in which the 2014 Plan became effective and ending on (and including) January 1, 2024, in an amount equal to 4% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year. The Company’s Board of Directors may act prior to January 1st of a given year to provide that there will be no January 1st increase in the Share Reserve for such year or that the increase in the Share Reserve for such year will be a lesser number of shares of common stock than would otherwise occur. On January 1, 2020, the Share Reserve increased by 261,249 shares due to the automatic 4% increase. The Share Reserve is currently 2,783,616 shares as of June 30, 2020.

In light of stockholder approval of the 2014 Plan, the Company no longer grants equity awards under the 2007 Plan. As of June 30, 2020, 0 shares of an aggregate total of 407,500 shares were available for future stock-based compensation grants under the 2007 Plan and 1,258,557 shares of an aggregate total of 2,783,616 shares were available for future stock-based compensation grants under the 2014 Plan.

Aggregate intrinsic value represents the difference between the closing market value as of June 30, 2020 of the underlying common stock and the exercise price of outstanding, in-the-money options. A summary of the Company’s stock option activity and related information for the six months ended June 30, 2020 is as follows:


	Options Outstanding
				Weighted
	Number of	Weighted		Average
	Stock	Average		Remaining	Aggregate
	Options	Exercise		Contractual	Intrinsic Value
	Outstanding	Price		Term (In Years)	(in thousands)
Balance, January 1, 2020	1,581,582	$	3.23	5.86	$	70,827
Options exercised	(32,567)		3.01	—		—
Balance, June 30, 2020	1,549,015	$	3.23	5.37	$	66,248
Exercisable as of June 30, 2020	1,482,272	$	3.10	5.28	$	63,588

The total compensation cost related to unvested stock option awards not yet recognized was $307 as of June 30, 2020. The weighted average period over which the total unrecognized compensation cost related to these unvested stock awards will be recognized is 0.66 years. There were no options granted during the three or six months ended June 30, 2020 or 2019.

The Company has recorded an expense of $61 and $98 as it relates to stock-based compensation for the three months ended June 30, 2020 and 2019, respectively. The Company has recorded an expense of $128 and $196 as it relates to stock-based compensation for the six months ended June 30, 2020 and 2019, respectively:


	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Cost of Revenue	$	—	$	1	$	—	$	1
Engineering and Product Development		—		5		—		12
Sales and Marketing		—		15		—		31
General and Administrative		61		77		128		152
Total	$	61	$	98	$	128	$	196

Net Income Per Share, Basic and Diluted

6 Months Ended

Jun. 30, 2020

Net Income Per Share, Basic and Diluted

Net Income Per Share, Basic and Diluted

10. Net Income Per Share, Basic and Diluted

Basic earnings per share (“EPS”) represent net income attributable to common stockholders divided by the weighted average number of common shares outstanding during the measurement period. Diluted EPS represents net income attributable to common stockholders divided by the weighted average number of common shares outstanding during the measurement period while also giving effect to all potentially dilutive common shares that were outstanding during the period using the treasury stock method.

Basic and diluted EPS is calculated as follows:


	Three months ended June 30,
	2020					2019
	Shares	Net Income		EPS		Shares	Net Income		EPS
Basic	6,548,215	$	1,075	$	0.16	6,411,606	$	2,619	$	0.41
Common stock warrants	69,039		—			168,099		—
Common stock options	1,417,794		—			1,506,435		—
Diluted	8,035,048	$	1,075	$	0.13	8,086,140	$	2,619	$	0.32


	Six months ended June 30,
	2020					2019
	Shares	Net Income		EPS		Shares	Net Income		EPS
Basic	6,540,755	$	3,748	$	0.57	6,368,905	$	4,472	$	0.70
Common stock warrants	69,377		—			207,471		—
Common stock options	1,440,262		—			1,551,865		—
Diluted	8,050,394	$	3,748	$	0.47	8,128,241	$	4,472	$	0.55

The were no weighted average shares outstanding of common stock equivalents excluded from the computation of diluted net loss per share for the three or six months ended June 30, 2020 and 2019.

Basis of Presentation (Policies)	6 Months Ended
Basis of Presentation (Policies)	Jun. 30, 2020
Basis of Presentation
Basis of Presentation	Semler Scientific, Inc., a Delaware corporation (“Semler” or “the Company”), prepared the unaudited interim financial statements included in this report in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 9, 2020 (the “Annual Report”). In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any future period, including the full year. On January 30, 2020, the World Health Organization (“WHO”) declared the recent novel coronavirus (COVID-19) outbreak a global health emergency, which prompted national, state and local governments to begin putting actions in place to slow the spread of COVID-19. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic. The outbreak of COVID-19 has resulted in travel restrictions, quarantines, “stay-at-home” and “shelter-in-place” orders and extended shutdown of certain businesses around the world. For the three and six months ended June 30, 2020 the Company's revenues, primarily from variable-fee licenses were negatively impacted by the COVID-19 pandemic. The extent and duration of the pandemic is unknown, and the future effects on the Company's business are uncertain and difficult to predict. The Company is continuing to monitor the events and circumstances surrounding the COVID-19 pandemic, which may require adjustments to the Company's estimates and assumptions in the future.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements Accounting Pronouncements Recently Adopted In November 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-08 – Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customer (Topic 606). The amendments on this update require that an entity measure and classify share-based payment awards granted to a customer by applying the guidance in Topic 718. The amount recorded as a reduction in the transaction price should be based on the grant-date fair value of the share-based payment award. This standard is effective for the Company’s annual periods beginning after December 15, 2019 , including interim periods within those fiscal years. The Company adopted the new standard on January 1, 2020 and determined that the adoption of this new accounting guidance did not have a material impact on its financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of costs. The ASU specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. This standard is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted the new standard on January 1, 2020 and determined that the adoption of this this new accounting guidance did not have a material impact on its financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU modify the disclosure requirements on fair value measurements removing the requirements to disclosure amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. In addition, it modified certain disclosures related to Level 3 fair value measurements and added additional disclosures regarding the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period. This update is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted the new standard on January 1, 2020 and determined that the adoption of this this new accounting guidance did not have a material impact on its financial statements. Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Topic 326”). This ASU requires timelier recording of credit losses on loans and other financial instruments held. Instead of reserves based on a current probability analysis, Topic 326 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. All organizations will now use forward-looking information to better inform their credit loss estimates. Topic 326 requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide information about the amounts recorded in the financial statements. In addition, Topic 326 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326 Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, to introduce amendments which will affect the recognition and measurement of financial instruments, including derivatives and hedging. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments – Credit Losses (Topic 326); Targeted Transition Relief. The amendments in this ASU provide entities that have certain instruments within the scope of Subtopic 326-20 with an option to irrevocably elect the fair value option in Subtopic 825-10, applied on an instrument-by-instrument basis for eligible instruments upon adoption of Topic 326. This standard and related amendments are effective for the Company’s fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2023. The Company does not anticipate this new standard will have a material impact on its financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes. This update is effective for the Company’s annual periods beginning after December 15, 2020, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2021. The Company does not anticipate this update to have a material impact on its financial statements. In January 2020, the FASB issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the interaction between the accounting for investments in equity securities, investment in equity method and certain derivatives instruments. The ASU is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. This ASU is effective for fiscal years beginning after December 15, 2021. The adoption of this ASU is not expected to have any impact on the Company's results of operations, cash flows or financial position. In March 2020, FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses standard issued in 2016 (ASU No. 2016-13). The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company's financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (IBORs) and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The ASU can be adopted no later than December 1, 2022, with early adoption permitted. The Company has not yet adopted this ASU and is evaluating the effect of adopting this new accounting guidance.

Stock Option Plan (Tables)

6 Months Ended

Jun. 30, 2020

Stock Option Plan

Schedule of stock option activity


	Options Outstanding
				Weighted
	Number of	Weighted		Average
	Stock	Average		Remaining	Aggregate
	Options	Exercise		Contractual	Intrinsic Value
	Outstanding	Price		Term (In Years)	(in thousands)
Balance, January 1, 2020	1,581,582	$	3.23	5.86	$	70,827
Options exercised	(32,567)		3.01	—		—
Balance, June 30, 2020	1,549,015	$	3.23	5.37	$	66,248
Exercisable as of June 30, 2020	1,482,272	$	3.10	5.28	$	63,588

Schedule of stock-based compensation


	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Cost of Revenue	$	—	$	1	$	—	$	1
Engineering and Product Development		—		5		—		12
Sales and Marketing		—		15		—		31
General and Administrative		61		77		128		152
Total	$	61	$	98	$	128	$	196

Net Income Per Share, Basic and Diluted (Tables)

6 Months Ended

Jun. 30, 2020

Net Income Per Share, Basic and Diluted

Schedule of basic and diluted net EPS


	Three months ended June 30,
	2020					2019
	Shares	Net Income		EPS		Shares	Net Income		EPS
Basic	6,548,215	$	1,075	$	0.16	6,411,606	$	2,619	$	0.41
Common stock warrants	69,039		—			168,099		—
Common stock options	1,417,794		—			1,506,435		—
Diluted	8,035,048	$	1,075	$	0.13	8,086,140	$	2,619	$	0.32


	Six months ended June 30,
	2020					2019
	Shares	Net Income		EPS		Shares	Net Income		EPS
Basic	6,540,755	$	3,748	$	0.57	6,368,905	$	4,472	$	0.70
Common stock warrants	69,377		—			207,471		—
Common stock options	1,440,262		—			1,551,865		—
Diluted	8,050,394	$	3,748	$	0.47	8,128,241	$	4,472	$	0.55

Concentration of Credit Risk (Details)	3 Months Ended		6 Months Ended		12 Months Ended
Concentration of Credit Risk (Details)	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Customer concentration risk \| Revenue
Concentration of Credit Risk
Number of customers	1	3	2	3
Customer concentration risk \| Revenue \| Customer one
Concentration of Credit Risk
Concentration risk percentage	62.10%	50.80%	52.50%	53.00%
Customer concentration risk \| Revenue \| Customer two
Concentration of Credit Risk
Concentration risk percentage		14.80%	14.00%	13.20%
Customer concentration risk \| Revenue \| Customer three
Concentration of Credit Risk
Concentration risk percentage		13.80%		11.10%
Customer concentration risk \| Accounts receivable
Concentration of Credit Risk
Number of customers			3		3
Customer concentration risk \| Accounts receivable \| Customer one
Concentration of Credit Risk
Concentration risk percentage			33.00%		55.90%
Customer concentration risk \| Accounts receivable \| Customer two
Concentration of Credit Risk
Concentration risk percentage			12.10%		17.60%
Customer concentration risk \| Accounts receivable \| Customer three
Concentration of Credit Risk
Concentration risk percentage			10.60%		12.00%
Vendor concentration risk \| Accounts payable
Concentration of Credit Risk
Number of vendors			2		3
Vendor concentration risk \| Accounts payable \| Vendor one
Concentration of Credit Risk
Concentration risk percentage			11.40%		23.30%
Vendor concentration risk \| Accounts payable \| Vendor two
Concentration of Credit Risk
Concentration risk percentage			10.30%		20.30%
Vendor concentration risk \| Accounts payable \| Vendor three
Concentration of Credit Risk
Concentration risk percentage					11.10%

Stock Option Plan (Details) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares
Number of Stock Options Outstanding
Balance, Beginning \| shares	1,581,582
Options exercised \| shares	(32,567)
Balance, Ending \| shares	1,549,015	1,581,582
Exercisable, Ending \| shares	1,482,272
Weighted Average Exercise Price
Balance, Beginning \| $ / shares	$ 3.23
Options exercised \| $ / shares	3.01
Balance, Ending \| $ / shares	3.23	$ 3.23
Exercisable, Ending \| $ / shares	$ 3.10
Weighted Average Remaining Contractual Term, Options Outstanding (in years)	5 years 4 months 13 days	5 years 10 months 9 days
Weighted Average Remaining Contractual Term, Options Exercisable (in years)	5 years 3 months 10 days
Aggregate Intrinsic Value, Options Outstanding \| $	$ 66,248	$ 70,827
Aggregate Intrinsic Value, Options Exercisable \| $	$ 63,588

Stock Option Plan - Additional information (Details) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended		6 Months Ended
	Jan. 31, 2019	Oct. 31, 2015	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost related to non-vested stock options			$ 307		$ 307
Weighted average period of unvested stock awards					7 months 28 days
Stock-based compensation expense			$ 61	$ 98	$ 128	$ 196
Number of stock option granted			0	0	0	0
2007 Key Person Stock Option Plan \| Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for future stock-based compensation grants			0		0
Maximum number of shares issued pursuant to awards granted under plan			407,500		407,500
2014 Stock Incentive Plan \| Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for future stock-based compensation grants			1,258,557		1,258,557
Maximum number of shares issued pursuant to awards granted under plan			2,783,616		2,783,616		450,000
Maximum term of stock option grants		10 years
Number of share reserve increased	261,249	1,500,000
Percentage of shares reserve increased	4.00%	4.00%

Net Income Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net Income Per Share, Basic and Diluted
Basic EPS (in shares)	6,548,215	6,411,606	6,540,755	6,368,905
Common stock warrants (in shares)	69,039	168,099	69,377	207,471
Common stock options (in shares)	1,417,794	1,506,435	1,440,262	1,551,865
Diluted EPS (in shares)	8,035,048	8,086,140	8,050,394	8,128,241
Net Income - Basic EPS	$ 1,075	$ 2,619	$ 3,748	$ 4,472
Net Income - Common stock warrants	0	0	0	0
Net Income - Common stock options	0	0	0	0
Net Income - Diluted EPS	$ 1,075	$ 2,619	$ 3,748	$ 4,472
Basic EPS (in dollars per share)	$ 0.16	$ 0.41	$ 0.57	$ 0.70
Diluted EPS (in dollars per share)	$ 0.13	$ 0.32	$ 0.47	$ 0.55

Variable-fee Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Variable-fee Revenue (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Variable-fee Revenue
Revenue from variable-fee licenses	$ 290	$ 2,250	$ 2,992	$ 3,506
Revenue from sales of hardware and equipment accessories	$ 129	$ 307	$ 400	$ 552

Property and Equipment, net (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Property and Equipment, net
Capital assets	$ 737	$ 636
Less: accumulated depreciation	(450)	(387)
Capital assets, net	$ 287	$ 249

Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accrued Expenses
Compensation	$ 2,365	$ 2,803
Accrued taxes	615	378
Miscellaneous accruals	363	733
Total accrued expenses	$ 3,343	$ 3,914

Income Taxes (Details)	3 Months Ended		6 Months Ended
Income Taxes (Details)	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Taxes
Effective income tax rate	(8.59%)	2.86%	15.59%	1.69%
Federal statutory rate			21.00%	21.00%

Assets for Lease, net (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets for Lease, net
Assets for lease	$ 3,308	$ 3,374
Less: accumulated depreciation	(1,380)	(1,295)
Assets for lease, net	$ 1,928	$ 2,079